Don’t Miss the Boat on Location-Based Social Networks

Forrester Research on Monday released an in-depth report on location-based mobile apps. AdvertisingAge broke down the results, which report that only four percent (4%) of online adults in the US have used apps to connect to services like Foursquare and Gowalla.

With Foursquare I can check into local businesses. However, few of them offer me any rewards or discounts, thus missing the boat on a potentially popular marketing tool.

Location-based social networks (LBSNs) allows consumers to “check in” at a business. These networks use GPS to pinpoint locations as well as provide marketers a means to target consumers depending on where they are rather than just what they like. Services like Foursquare, Gowalla, Brightkite and Loopt are designed to socially connect people at locations, but businesses can also use these services to offer up specials and gain a better perspective on their customers. Location-based applications (apps) run on smartphones (like the Palm Pre, iPhone and Droid), but not commonly on standard cell phones.

The verdict, outlined by AdAge.com’s article, is for marketers to stop (or not even start) focusing efforts on these services, claiming they’re too small for any major marketing efforts. According to Forrester, 84% of study respondents stated they weren’t familiar with location-based apps.

While the numbers are compelling, and probably accurate (I have to constantly explain in detail services like Foursquare to both consumers and businesses), I think now, rather than later, is the perfect time for companies to take advantage of what could very well become the next big thing. After all, Twitter still hasn’t been adopted by all major marketers.

Here’s the problem: Advising marketers to hold off because the majority of users aren’t yet educated on location-based services themselves is like telling them it’s wise to pass on a potentially tremendous opportunity because people aren’t familiar with something.

Case in point:

I’m the Foursquare mayor of my local Starbucks. All last month I was able to get $1 off my Frappaccinos. I learned about the promotion through social media outlets, and was reminded of my nearby mayor special whenever I logged into area businesses. Both Starbucks and Foursquare missed the mark, though, because this promotion did nothing to boost business at the local level. I didn’t change my buying habits, and there was no power-play with others vying to steal my position (which would not be an easy or inexpensive feat). Instead, it just meant I was getting discounts. Lucky me.

What could Foursquare, Starbucks and marketing teams have done to really drive business and educate consumers about location-based services? For starters, a window cling that read “Get Your Discount Here”, with a link to Foursquare.com and Starbucks.com (throw in a QR Code for fun), as well as literature inside the store. Another way would have been to offer discounts to anyone who checked in. After all, if it’s going to take daily visits to oust me, how many are going to make the effort just to possibly save a buck per day for a few weeks? By offering even just 25-cents across the board, Starbucks could have gained more repeat customers and Foursquare would be steadily increasing it’s presence.

According to AdAge.com, the report says nearly 80% of location-based app users are male, with the majority of them age 35 and under. Perhaps Sports Authority wasn’t missing the mark when it ran it’s own Foursquare mayor special – a $10 discount. But these numbers shouldn’t be that difficult to change. Victoria’s Secret: are you listening?

Marketers, Take Note…

Location-based services have great potential on both local and national levels. Why? Because people:

Love to save money and play games (like challenge each other to mayorships).

Love playing around with their smartphones.

Would love to further justify the use of their smartphones.

Love technology – and LBSN uses quite a bit of it!

It’s going to take more than just relying on the services to get the word out, though. In order for it all to work, businesses have to embrace LBSNs and help educate consumers as well. After all, it’s the businesses themselves that stand to gain a bigger profit from the use of these services.